Managed futures are accounts which are managed or traded by the commodity trade advisor. The CTA will trade the account based on their trading system and trade designs for fees (there will be commission costs and exchange fees for every trade as well). The commodity trade advisor has the authority to trade the account via limited power of attorney given by the account owner. This can be withdrawn at any time.

By using analysis, programs, or algorithms to find trends or possible trade entry and exit points, the commodity trade advisor will attempt to make profits for the managed futures account. There is still a substantial risk of a loss no matter who managed your money, but for some traders, there is a perceived benefit in possible diversity that comes with managed futures trading accounts.

For a trader who also has stocks and bonds, there is a potential for diversity in a managed futures account through non-correlated investments. Commodities and currency futures may often be used as a potential alternative investing vehicle. Losses are still possible in any futures and options investing, but the growth of the managed futures industry has appeared to show strength.

Historical performances for many managed futures CTA programs are available within the disclosure documents. These are never going to be a promise for future returns, but they can provide insight into the managed futures program.

Disclosure documents also provide important information about the trading systems and financial education and experience of the commodity trade advisor or firm. A detailed explanation of incentive fees and costs will also be contained within.

Managed futures are not the right investment for all traders, take time to educate yourself about the potential risks and rewards. A managed futures account will also likely have to have a sizeable initial deposit to meet the potential margin requirements if the commodity trade advisor will engage in outright futures positions or uncovered option writing.

Trading in futures and options involves a substantial degree of a risk of loss and is not suitable for all investors. Past performance is not indicative of future results.